Trucking in Massachusetts; How the Rolling Stock Tax impacts you

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The Massachusetts Department of Revenue (DOR) secured a change in the tax law in the mid-1990s and is only now enforcing it. The change? The ability to tax rolling stock if a company has a “substantial nexus” to the state!

While 37 states exempt the sales and use tax on rolling stock, Massachusetts now applies this tax to newly purchased trucks because of this law and a company’s “substantial nexus” to the state.

Under Massachusetts law, a “substantial nexus” or “tax jurisdiction” can be established when a company:

  • is headquartered or commercially domiciled in the state
  • owns real or tangible personal property in the state, including property that is possessed, held or used by another person pursuant to a lease, license, consignment or other arrangement;
  • uses real or tangible personal property that it does not own in the state, including property that it possesses or holds pursuant to a lease, license, consignment or other arrangement;
  • has a full or part-time employee acting on its behalf in the state, irrespective of the nature of the employment, see 830 CMR 63.39.1(3)(c)
  • has an independent contractor or other non-employee representative acting or operating on its behalf in the state for the purpose of selling, delivering, installing, assembling, maintaining or repairing the corporation’s products, or taking orders for or otherwise establishing or maintaining a market for the corporation’s products and/or services in the state, see 830 CMR 63.39.1(3)(c);
  • does not have the contacts or other incidents with the state as referenced in 830 CMR 63.39.1(3)(b)1. through 7., but has considerable in-state sales derived through either economic or virtual contacts.  See 830 CMR 63.39.1(3)(d). See also South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018).

If the DOR reviews your company, it can seek tax on any rolling stock you’ve purchased for the past three to six years.

For example, consider the following: Your company has a terminal, customer service center or headquarters in Massachusetts. You’ve purchased six tractors every year in New Hampshire for five years. Sales tax, if the vehicles were purchased in Massachusetts, might be approximately $8,500 each (i.e. $135,000 x 6.25%). Each year, you send the six trucks to your Massachusetts terminal to be upfitted according to your company’s standards, but they are otherwise used outside of the state. The DOR, because of your substantial nexus to the state and the vehicles’ entry into the state, could try to collect over $250,000 plus penalties for six years’ worth of unpaid taxes. (5 years x $51,000 in taxes owed (i.e. 6 tractors x $8,500)). In reality, certain trucking companies have already been assessed back taxes and penalties exceeding millions of dollars and penalties under similar scenarios.

TAM is currently working with elected officials to remove this rolling stock tax from law. Last legislative session, the Massachusetts House of Representatives passed this exemption.

A study by the Dukakis Center at Northeastern University showed that eliminating the rolling stock tax in Massachusetts will provide for future growth of the trucking industry, improve public safety and produce public safety benefits.

TAM has been working with other organizations, including statewide business, environmental, and public safety groups to reverse this law.

Removing the rolling stock tax from Massachusetts law is just one of many initiatives that TAM works on for the Massachusetts trucking industry.

FMCSA emergency declaration

FMCSA extends Emergency Relief Declaration to Dec. 31

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The Federal Motor Carrier Safety Administration (FMCSA) has again extended its emergency declaration relaxing hours-of-service rules for motor carriers that are providing direct assistance in support of COVID-related relief efforts.

The emergency declaration 2020-002 – originally set to expire on Sept. 14 – has been extended to Dec. 31, 2020, and applies to all 50 states and the District of Columbia.

The updated declaration is posted on the FMCSA website, and is available as a downloadable PDF.

 

ATRI launches Top Industry Issues survey

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The American Transportation Research Institute (ATRI) is conducting its 16th annual Top Industry Issues Survey to identify critical issues confronting our industry and develop strategies for addressing those issues now and in the future.

Your opinion is vital to stakeholders who are working to ensure the long-term vitality of the trucking industry. TAM encourages you to set aside a few minutes to provide your feedback.

From ATRI.

… ATRI’s annual analysis not only ranks the issues overall but also provides details on where critical topics are ranked differently by motor carriers and professional drivers. The report also allows stakeholders to monitor issues over time, to better understand which issues are rising, or falling, in criticality.

ATRI requests you complete the survey no later than Oct. 16. You can find results from the 2019 survey posted as a PDF online.

Take the ATRI Survey

FMCSA to request feedback on HOS proposal

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The Federal Motor Carrier Safety Administration (FMCSA) is considering a pilot program allowing drivers additional flexibility to pause their 14-hour workday. If you wish to submit feedback, you’ll need to do so no later 60 days from when the notice is published in the Federal Register. Note the notice has not yet been published.

You can find information on the proposed pilot program on the FMCSA website here [PDF].

Background Information

From the FMCSA release…

On August 22, 2019, FMCSA published a Notice of Proposed Rulemaking (NPRM) concerning drivers’ hours of service which proposed certain amendments to provide greater flexibility for drivers, without adversely affecting safety (84 FR 44190).

As part of that rulemaking, FMCSA proposed that a single off-duty break of between 30 minutes and 3 consecutive hours may be excluded from the 14-hour driving window, provided the driver has at least 10 consecutive hours off-duty at the end of the work shift.

The Agency explained that a single pause of up to 3 hours would provide significantly more flexibility than is allowed under the current rules. The pause would have allowed drivers to take an off-duty break without fear of exhausting their available hours under the 14-hour clock, which would also have allowed them to get additional rest or avoid traffic congestion.

After reviewing the public comments to the NPRM, the Agency decided not to include the pause to the 14-hour driving window in the Final Rule, published on June 1, 2020 (85 FR 33396). FMCSA continues to believe that an opportunity for a single off duty pause in the 14-hour driving window could provide flexibility for drivers without compromising safety, as explained in the NPRM.

From Trucking Info…

When the final rule was published, asked why this provision was omitted from the final rule, Acting Administrator Jim Mullen explained that, “the split sleeper berth provides essentially the equivalent, if not more flexibility, in that regard.” So if a driver wanted to take up to a three-hour break to wait out rush hour, for instance, he or she could take that as split sleeper berth time.

In the final rule, the agency cited concerns raised by commenters that drivers might be “pressured by carriers, shippers, or receivers to use the break to cover detention time, which would not necessarily provide the driver an optimal environment for restorative rest,” noted the trucking attorneys at Scopelitis, Garvin, Light, Hanson & Feary.

To comment on the proposed pilot program, visit the Regulations.gov website. Search for Docket No. FMCSA-2020-0098. Once the proposal has been published, you’ll be able to submit your comment.

FMCSA emergency declaration

FMCSA Emergency Declaration extended

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On Aug. 11, the FMCSA extended – and modified – the emergency declaration that was set to expire on Aug. 14. The modified declaration provides regulatory relief for motor carriers and drivers providing direct assistance in support of relief efforts related to COVID-19, and has been expanded to included emergency restocking of distribution centers and stores.

Specifically, the declaration is limited to the transportation of:

  • Livestock and livestock feed;
  • Medical supplies and equipment related to the testing, diagnosis and treatment of COVID-19;
  • Supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19 such as masks, gloves, hand sanitizer, soap and disinfectants, and;
  • Food, paper products and other groceries for emergency restocking of distribution centers or stores.

Please note, this modified declaration is not effective until 12:01 a.m. ET Aug. 15, and expires at 11:59 p.m. ET on Sept. 14, 2020.

Under this declaration, emergency regulatory relief is provided from parts 390 through 399 of the FMCSRs, including the hours-of-service regulations. Emergency relief does not include certain FMCSRs related to the safe operation of CMVs, such as controlled substance and alcohol testing, financial responsibility requirements, CDL requirements, operation of a CMV while ill or fatigued, size and weight requirements, and additional FMCSRs which are outlined in the declaration.

We encourage everyone to review the applicability, restrictions, and limitations which are included in the exemption posted to the FMCSA’s website.

A PDF copy of the declaration is available for download as a PDF.

UPS, FedEx gear up to ship COVID-19 vaccine when ready

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From Transport Topics.

While the medical community works overtime developing a vaccine for the COVID-19 virus, transportation and logistics companies are hard at work on strategies to ship it safely around the world once it is ready.

Some optimistic projections suggest that could happen by year’s end, so transportation companies want to be ready. Officials from corporations involved in that planning tell Transport Topics that the scope of the effort is unprecedented.

For example, UPS is building two freezer farms — one at its air hub in Louisville, Ky., another in Venlo, Netherlands — that the company said will store millions of vials of a vaccine at temperatures as low as minus 80 degrees Celsius, or minus 112 degrees Fahrenheit.

Read the full article on the Transport Topics website.

TETC sends letter of appreciation to trucking industry

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The Eastern Transportation Coalition (formerly the I-95 Corridor Coalition) asked TAM to pass on their letter of appreciation to our industry for the risks and challenges faced by truckers. They want to recognize your commitment to move goods efficiently and safely during this time. The Coalition’s Executive Board is made up of the Secretaries and Commissioners of Northeast State DOTs, including Stephanie Pollack, Secretary and CEO. Massachusetts Department of Transportation.

The text of the letter is included below, but you can download the PDF with signatories listed.

Dear Kevin:

As the nation’s supply chains face unprecedented challenges related to COVID-19, one of the most critical factors has been the ability to meet customer and public health needs in a reliable and timely manner. While each modal component of the transportation system has been an important player during this time, the trucking industry has been at the very heart of it.

On any day, but certainly over these last several months and continuing, the industry collectively and truck drivers specifically, ensure that critical supplies reach the doors of America’s businesses, homes, and medical facilities. The drivers have accomplished this not only with great diligence and dedication, but often with great personal sacrifice.

The undersigned, as the Executives of our respective state agencies and comprising the Board of the Eastern Transportation Coalition, give recognition and thanks for the outstanding professionalism and commitment of the trucking industry and its hard-working and dedicated individuals during this time. The Coalition, a partnership of State Departments of Transportation and related agencies, acknowledge and appreciate the role that the truck drivers and the trucking industry play every day in the well-being of our states’ and the national economy. With trucks carrying a significant portion of the 6.5 billion tons of freight moving in our corridor annually, this event has shown an even greater emphasis and importance to that role.

As we move ahead on the road to recovery from COVID-19, please extend our sincere gratitude to your industry members – the companies and the dedicated drivers. As our individual states and as the Eastern Transportation Coalition collectively, we will reach out to you and your members to discuss how to further support the critical role the trucking industry plays in moving goods in this corridor and throughout the nation.

Sincerely,

Patricia Hendren, Executive Director, TETCoalition
Jennifer Cohan, Secretary, Delaware DOT Russell McMurry, Commissioner, Georgia DOT
Gregory Slater, Secretary, Maryland DOT
Kevin Thibault, Secretary, Florida DOT
Bruce Van Note, Commissioner, Maine DOT
John R. Cooper, Director, Alabama DOT
Joseph Giulietti, Commissioner, Connecticut DOT
Stephanie Pollack, Secretary, Massachusetts DOT

Diane Scaccetti, Commissioner, New Jersey DOT
Marie Therese Dominguez, Comm, NY State DOT
Eric Boyette, Secretary, North Carolina DOT
Yassmin Gramian, Secretary, Pennsylvania DOT
Christy Hall, Secretary, South Carolina DOT
Clay Bright, Commissioner, Tennessee DOT
Joe Flynn, Secretary, Vermont AOT
Stephen Brich, Commissioner, Virginia DOT
Shannon Valentine, Secretary, Virginia DOT

Diesel continues slow, steady upward climb

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From Transport Topics.

The national average retail price of diesel rose for the fifth consecutive week, up seven-tenths of a cent to $2.437 a gallon, the Energy Information Administration reported July 6.

Even with the increase from $2.43, the price of trucking’s primary fuel is 61.8 cents a gallon less than it was a year ago.

Read the full article online at Transport Topics.

McConnell expects new virus relief bill this month

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From Transport Topics.

Senate Majority Leader Mitch McConnell predicted Congress will pass one final coronavirus rescue package later this month and appealed to everyone in public life to urge people to wear masks to control the spread. …

McConnell said he’s “pretty sure” that a bill will come together in the next couple of weeks. He said it will be crafted in his office with consultation from the administration and then negotiated with Democrats, who endorsed a $3.5 trillion package approved by the House in May. Senate Republicans have dismissed that plan and are discussing a package of as much as $1 trillion in total spending.

Read the full post at Transport Topics online.

FMCSA logo

FMCSA may “Exercise Discretion” enforcing random drug testing

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The Federal Motor Carrier Safety Administration announced that in some locations, it may “exercise discretion” and not enforce minimum annual random drug and alcohol testing rates in areas still affected by the COVID-19 pandemic.

Due to the ongoing impacts of the emergency, motor carriers may not be able to fully comply with 49 CFR Part 382, that mandates certain testing requirements.

The notice, dated July 6, 2020, can be found online at the FMCSA website. In part, the notice states…

In recognition of these barriers to full compliance in some locations, the Agency may exercise discretion to determine not to enforce the minimum annual percentage random testing rates for drugs and alcohol, and the requirement that each employer ensure that the dates for administering random drug and alcohol tests are spread reasonably throughout the calendar year, as set forth in 49 CFR 382.305(b)(1) and (2) and 49 CFR 382.305(k), respectively. FMCSA emphasizes, however, that employers capable of meeting these requirements must continue to do so.

Employers must continue to select drivers at the required rate of 50 percent of their average number of driver positions for controlled substances, and 10 percent for random alcohol testing during the calendar year 2020. If a test is unable to be completed due to the COVID-19 public health emergency, the motor carrier must maintain written documentation of the specific reasons for non-compliance.

Read the complete notice [PDF].